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14. Sue Doughty (Guildford) (LD): How many respondents to the recent Treasury consultation on economic instruments to improve household energy efficiency supported a rate of VAT of 5 per cent. for the supply and installation of energy-efficient products or materials in non-grant schemes when householders employ contractors. [144729]

15. Brian White (Milton Keynes, North-East) (Lab): How many respondents to the recent Treasury consultation on economic instruments to improve household energy efficiency supported capital allowances and enhanced capital allowances for companies to write off investments in energy saving equipment provided to social landlords and households. [144730]

The Economic Secretary to the Treasury (John Healey): The Government have published a summary of consultation responses, which is available on the Treasury website. It explains that we received 126 responses to the consultation, of which 120 supported a reduced rate of VAT for the supply and installation of energy-efficient products or materials, and 67 supported capital allowances.

Sue Doughty : I thank the Minister for his answer and for the response he gave earlier to the hon. Member for Nottingham, South (Alan Simpson). Will the Minister continue to examine closely the issue of reducing VAT on energy-saving materials and admit that the Government were wrong to suggest that Europe was stopping them reducing VAT to 5 per cent.? Will he make an announcement as soon as possible so that people can put plans in place to reduce the scourge of fuel poverty in this day and age?

John Healey: The hon. Lady serves on the Environmental Audit Committee, so I am surprised by her question. I would have expected her to know that it is wrong to say that without a change in Europe we could introduce a reduced rate of VAT on, for instance, energy-saving materials for do-it-yourself installation in homes. She is also wrong to say that without a change in Europe we can introduce a reduced rate for energy-efficient products such as fridges, boilers and light bulbs. We continue to battle with our friends in other member states in Europe to try to win the argument and we will consider the much narrower areas where we have the

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scope within the European system to introduce reduced rates that could help to achieve greater energy efficiency in the UK.

Brian White: I thank my hon. Friend for his earlier responses and I congratulate the Government on the swift announcement today of their combined heat and power targets for the whole of the Government estate, as required by the Sustainable Energy Act 2003. I wish to draw his attention to the frustration in the industry at the fact that the barriers that the Treasury consultation document so rightly identified could be addressed more quickly if the issue of capital allowances were tackled. I urge him to do that when the Government present their energy efficiency plan in February.

John Healey: In many ways I understand the point that my hon. Friend makes about impatience and frustration in the industry, but I hope that he will see the pre-Budget report as encouraging. It confirms that we see the case for using economic instruments to promote energy efficiency in the home and that we are considering a range of possible fiscal measures, including the capital allowances in which my hon. Friend is so interested. The work is complicated by the European review of reduced VAT rates and by a review that we have to undertake of the operation of corporation tax. Without a clearer idea of the outcome of both, it is difficult to make hard decisions. Nevertheless, we do not want to delay such decisions or announcements any longer than we need too.

Sir Sydney Chapman (Chipping Barnet) (Con): While I appreciate that in the area of energy efficiency VAT rating is a matter of EU directive interpretation and the decision of the Chancellor in his next Budget statement, will the Minister undertake a cost-benefit analysis well ahead of the Budget, which would indicate the loss to the Revenue on one side, if a selected group of energy efficiency materials had a lower rate of VAT—in particular, thermal insulation materials—against, on the other side, the benefits from improving energy efficiency in households? That would be helpful for the Government and the House in interpreting whatever measures the Chancellor announces in his next Budget.

John Healey: As the House will expect, we do such analyses of the economic costs and benefits of any potential policy measures. This is part and parcel of the case that we are making in Europe to have greater freedom in the United Kingdom to introduce reduced rates. Clearly, those calculations and that analysis will be part of any decisions that the Government take and the Chancellor announces as part of the Budget next year and beyond.

Millennium Development Goals

16. Mr. Win Griffiths (Bridgend) (Lab): If he will make a further statement on progress towards achieving the millennium development goals. [144731]

The Chancellor of the Exchequer (Mr. Gordon Brown): In addition to our regular meetings at G7 and with African Finance Ministers, we are calling a conference on the millennium development goals and on the

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international finance facility that we have proposed with China, India, Brazil and South Africa. We are also hosting at the Treasury a conference of Church leaders, faith groups and business to advance our proposals for the international finance facility. We are grateful for all-party support for this new proposal.

Mr. Griffiths : I thank my right hon. Friend for that response. At the conference, will he use his good offices to impress on South Africa, India and China the need to make sure that all those extremely poor parts of the world that are war-riven are brought back to the table of peace, to make sure that there is the right context for the millennium goals to be achieved more quickly?

Mr. Brown: I know how much work my hon. Friend does in this area and how active he has been in promoting the cause of peace and debt relief round the world. The Government are involved in trying to resolve many conflicts, in particular those that afflict areas of Africa such as the Democratic Republic of the Congo. We have proposed for countries that are coming out of conflict a far speedier process of debt relief so that, as they restructure their country, they can also restructure their economy free from the burden of debt. I hope that he and others will support us in what we are doing.

Mr. Andy Reed (Loughborough) (Lab/Co-op): Nobody doubts the Chancellor's commitment to ensuring that the millennium development goals are met, but I am sure that he is aware that we are falling well short of the targets that we set ourselves on the way. Does he agree that they could be speeded up in two ways: by the World Trade Organisation talks getting back on track and, specifically—I speak as a member of the all-party group on heavily indebted poorest countries—by him looking again at the debt levels and sustainability of the HIPC initiative for a number of those countries, particularly in Africa, in the light of the reduction in the price of consumer products such as coffee?

Mr. Brown: We continue to look at how we can advance debt relief. Twenty-seven countries are getting debt relief. Some of the countries mentioned by my hon. Friend the Member for Bridgend (Mr. Griffiths) could get debt relief if they were out of conflict. We continue to look at how we can persuade other countries to come up with more funds. My hon. Friend is right that the WTO talks are important to this and that public opinion matters in this. It is 20 years this Christmas since Bob Geldof's Band Aid raised public awareness of the problems of poverty in Africa. All parties and all good-minded people could combine and public opinion could be alerted to the blatant need to take further action to deal with world poverty.

Mr. Speaker: I call question 17. Norman Lamb is not here; the question has been withdrawn.

Fund Flows

18. Michael Fabricant (Lichfield) (Con): Thank you, Norman Lamb, and Mr. Speaker.

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The Financial Secretary to the Treasury (Ruth Kelly): The current account deficit in 2002 stood at 1.8 per cent. of GDP, well below past peaks. In 1989, the current account deficit reached more than 5 per cent. of GDP. The UK current account deficit is well below the US current account deficit of 5 per cent. of GDP.

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Michael Fabricant : I thank the Minister for that answer. Will she give an idea of the current trade deficit with the European Union and the current trade surpluses with the United States of America? What lessons on international trade do they give the Government?

Ruth Kelly: I have already given the hon. Gentleman an idea of the figures. Despite the fact that the UK economy grew faster than any other country in the EC on average in 2001 and 2002, the latest statistics show that the trade deficit as a percentage of GDP has been stable over the past couple of years.

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